The Contemporary Control Environment for the Achievement of CSR Objectives: An Analysis of Formal and Informal Controls

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The Contemporary Control Environment for the

Achievement of CSR Objectives: An Analysis of Formal and

Informal Controls

Joana Telker (S2517868)

MSc BA in Organizational and Management Control

University of Groningen

Faculty of Economics and Business

Abstract

This paper examines the use of formal and informal controls for the achievement of Corporate Social Responsibility objectives. The purpose was to determine which forms of controls are most widely used by business units in order to assure a satisfactory CSR performance. Additionally, it was intended to analyze

the ambition for engaging in CSR and its relation to the controls in use. Very little literature of management control discusses the difference between formal and informal controls and their contribution

to CSR performance, thus the inquiry is relevant to the field. Therefore, the paper was conducted using exploratory research, resulting in a set of propositions left for further testing. A survey instrument in conjunction with interviewing has been used for this purpose. The findings of the study reveal that most

often informal controls specifically designed for sustainability intentions positively contribute to the achievement of CSR objectives. Moreover, the more organizations appear to be intrinsically driven to achieve CSR objectives, the more use of sustainability controls is made, increasingly of informal nature.

Keywords: Corporate Social Responsibility, sustainability, performance, management control, formal and informal controls, motivation

Supervisor: Dr. H. J. van Elten Co-assessor: B. van der Kolk, MSc

Date: June 29, 2015

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1 Introduction

Background. Corporate Social Responsibility (CSR) has become a major concern for companies in today’s business environment (Adams & Frost, 2008; Gond, Grubnic, Herzig & Moon, 2012). It is defined as company activities demonstrating the inclusion of social and environmental concerns in their business operations and in their interactions with stakeholders (Marrewijk, 2003). However, critiques have claimed that currently existing definitions of CSR are biased in the sense that they derive from a world dominated by organizations and capital (Marrewijk, 2003; Gray, 2010). This world strongly influences the definitions being established and it is questionable whether they describe CSR objectively or with intent that suits organizational needs (Marrewijk; 2003; Gray, 2010). Accordingly, organizations appear to be truthfully involved in CSR thanks to an intentionally engineered definition serving the given purpose of today’s capital ruled world (Gray, 2010; Gallicano, 2011). This perception can be kept up in the public psyche because of a lack of insight into intra-organizational sustainable impact and the role of management control systems (MCS) that are supposed to support sustainability objectives within organizations (Gond et al., 2012). This implies that many companies claim to be very sustainable by making CSR part of their mission statement, however only few of these companies are actually sustainable (Gray, 2010; Gond et al., 2012). In other words, they may promote to be sustainable, yet do not take appropriate measures to ensure that they meet their sustainability targets (i.e. greenwashing). One of the main problems promoting this dilemma is the difficulty of measuring and controlling a company’s sustainable (i.e. CSR) performance (Marrewijk, 2003; Gray, 2010, Arjaliès & Mundy, 2013). Additional research is needed on sustainability measurement tools as well as on the MCS supporting CSR objectives (Adams & Frost, 2008; Gond et al., 2012).

Literature gap and basis of research. Research on control and measurement of sustainable performance is far from being completed. Current literature fails to provide an all-encompassing set of tools available for management to measure and control sustainable performance (Gray, 2010; Gond et al., 2012). Literature aims at developing environmental MCS (EMCS) applicable for practitioners (Pondeville, Swaen & de Rongé, 2013; Alonso-Pauli & Andre, 2015), yet these concepts lack precision and are situation dependent (Adams & Frost, 2008; Durden, 2008; Gray, 2010; Jones, 2011).

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4 formal and informal controls of the MCS. The former concerns written procedures and policies that direct behavior to achieve desired company goals, and detects and/or deters misconduct; whilst the latter addresses behavior that is not controlled through explicit, verifiable measures (Ouchi, 1977; Norris & O’Dwyer, 2004). It is comprised of shared values, beliefs and traditions which guide the behavior of employees (Norris & O’Dwyer, 2004).

Up to this point, admittedly, a comprehensive body of research is still missing which precisely explains and predicts the design and use of MCS within and across companies (Bedford, 2005). However, this only regards the general case in which the MCS is considered independent of a specific context. In connection with CSR specifically, the design and use of MCS is exceptionally unexplored (Gond et al., 2012). The problem is that contemporary literature not only misses, but also is incapable of providing one all-encompassing definition of MCS, as well as a comprehensive definition of its incorporated formal and informal controls, that apply to any given context (Chenhall, 2003; Malmi and Brown, 2008). One of the main reasons for this is that MCS are situation dependent, which means that they will be adjusted to company specific needs, and such needs in turn differ with respect to contingencies that confront the organization (Chenhall, 2003; Kruis, 2008; Malmi & Brown, 2008); contingencies such as sustainability developments, for instance.

In light of CSR it is yet unclear in which ways MCS contribute to the integration of CSR into organizational strategy (Gond et al., 2012). More importantly, for the purpose of this thesis one also needs to acknowledge the lack of literature that explains the use of formal and informal controls in supporting the accomplishment of company goals in the context of CSR performance (Norris & O’Dwyer, 2004; Arjaliès & Mundy, 2013).

Within companies it is often difficult to separate the effect of formal and informal controls on the behavior of employees (Norris & O’Dwyer, 2004). The interplay between these two types of controls confuses the roles that each of them performs. From a theoretical perspective, the informal system serves to sustain or circumvent the formal system in compelling employees to achieve their CSR targets (Norris & O’Dwyer, 2004). However, in practice the matter of controlling is more complex, as it is the human individual and not machines who performs organizational activities in the pursuit of CSR goals. Employees make decisions on a constant basis and it is the various forms of management controls that influence these decisions (Norris & O’Dwyer, 2004). In particular in connection with sustainability, employees may be greatly influenced in the way they make decisions by their perception of and attitude towards this social concern.

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5 different CSR objectives. They hence need controls suitable to their own ends. In other words, given the circumstances related to the sustainability goals, formal or informal controls may be more appropriate. It is thus the purpose of this thesis to learn about the use of the controls that companies believe support their achievement of CSR objectives. What is their nature? Are formal and informal controls used simultaneously in assuring that objectives are met? If that is true, how may this be the case?

The above discussion shows that there is a lack of insight into the use of formal and informal controls within the context of CSR. Because of this, it would contribute to existing literature to research companies’ CSR objectives and examine how they go about achieving them. Of interest is the distinction between formal and informal controls and their individual contribution to CSR performance. Hence the research question reads as follows:

‘’What is the relation between the use of formal and informal controls in achieving CSR objectives?’’

Theoretical and practical contributions. By focusing on how control systems operate in driving the attainment of organizational CSR goals, the paper contributes to the literature that deals with the concepts of controlling for CSR performance. It intends to respond to Arjaliès and Mundy’s (2013) request to research the relation between the use of formal and informal controls in pursuing CSR strategy. For this purpose, exploratory research will be conducted. It is unclear what results can be anticipated and the relatively immature state of existing literature on the topic does not provide enough evidence to develop hypotheses. Therefore exploratory research is chosen over explanatory, with the intent to deliver propositions as the output of this thesis.

Academics would benefit from this study because it refines the little existing theory that deals with the relation of management control and CSR. The research would further explore the relationship between achieving CSR objectives and the control instruments used. More precisely, by learning about the interaction between formal and informal controls, one can identify in which ways they may dominate, strengthen or weaken, complement or substitute each other, and simultaneously reduce the literature gap concerning the control environment in conjunction with CSR. Subsequently it would provide further insights on the process of how formal and informal controls drive organizational responsiveness in achieving CSR objectives.

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2 Theoretical Background

This part of the paper discusses contemporary concepts of the literature that are used to provide information on the basis for this thesis. Background information is given on CSR and respective company ambition levels, as well as on the theory of management control. Built on this theory, the research framework is developed.

2.1 Corporate Social Responsibility

CSR involves several definitions as there is no one holistic all-embracing definition that could accurately summarize its entire meaning and combine all contexts (Marrewijk, 2003). However, in a business context it is possible to introduce a broad but appropriate terminology. The definition that will be used for this research project is based on Marrewijk (2003) as it embraces all relevant elements important for this research. Marrewijk (2003) identifies CSR as company activities (voluntary) demonstrating the inclusion of social and environmental sustainability concerns in their business operations and in their interactions with stakeholders. Thus, according to this definition, CSR does not only address company shareholders, but also stakeholders including society (present and future), customers, suppliers, employees, and lastly the government (Marrewijk, 2003; Farooq, Farooq & Jasimuddin, 2014; Saeidi, Sofian, Saeidi, Saeidi & Saaeidi, 2015).

Environmental and social responsibility. CSR encompasses organizations’ commitment to both, environmental and social responsibilities (Lynes & Andrachuk, 2008). It therefore serves as an umbrella term to describe firms’ sustainable involvement.

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7 Environmental responsibility can be seen as an integrated part of social responsibility (Lynes & Andrachuk, 2008). In terms of CSR, the natural environment is considered one of many stakeholders that companies have. As a result, if a company is socially responsible to its stakeholders, being accountable to the environment is part of this larger responsibility (Lynes & Andrachuk, 2008). Therefore, it regards a firm’s obligation to society to reach its present needs without sacrificing and compromising future generations’ needs and their ability to meet them (Marrewijk, 2003). This can be accomplished by minimizing companies’ ecological footprint and creating value through, for instance, introducing environmental management aiming at implementing energy-saving measures, reducing pollution, and using renewable or substitutable resources (Lamberton, 2000; Marrewijk, 2003; Torugsa et al., 2013; Parsa et al., 2015).

Meeting the company’s CSR goals and obligations hence ensures that organizational activities are monitored and managed systematically, thereby creating credibility and integrity with external and internal stakeholders (Torugsa et al., 2013).

2.2 CSR Ambitions and Objectives

According to literature (Lamberton, 2000; Marrewijk, 2003), there are diverse objectives for companies to become involved in CSR. In a more general sense, these may concern a reduction of their ecological footprint by producing more goods and services using less (non-renewable, non-substitutable) natural resources (Lamberton, 2000). In addition to this, companies may seek to increase the quality of life and social equity by the redistribution of wealth and a subsequent mitigation of poverty (Lamberton, 2000). Yet, not all companies might have the same drive to engage in CSR. Their intentions might differ, deriving from an extrinsic and/or intrinsic need to engage in CSR. Consequently, the extent to which they are willing to engage might be affected (Marrewijk, 2003). In fact, many companies simply feel obliged to steer their company towards sustainability due to perceived external pressures, such as the fear of damaging the firm’s reputation or preventing violations of the law (Marrewijk, 2003).

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8 From the ‘compliance driven’ perspective (level 1), CSR is understood as providing welfare to society only within the limits of regulations from respective authorities (Marrewijk, 2003). In some cases organizations might be responsive to charity and stewardship considerations. However, the sole motivation for engaging in CSR is simply that it is an obligation or perceived as correct behavior in the eyes of society. The objective to engage in CSR is thus to take actions that prevent legal sanctions, but no further initiatives to involve in CSR are made (Marrewijk, 2003).

‘Profit driven’ CSR involvement (level 2) integrates social, ethical and ecological aspects into business operations and decision-making; yet only if it provides contributions to the financial bottom line. The motivation for this degree of engagement is most likely an improved reputation towards various stakeholders (i.e. customers, employees, shareholders) (Marrewijk, 2003).

The ‘caring level’ (level 3) addresses a balanced concern for economic, social and ecological issues, which are all considered important in themselves (Marrewijk, 2003). Moreover, the objective is to go beyond legal compliance and profit considerations. The motivation to integrate CSR at this level is that human potential, social responsibility and care for the planet are of crucial importance (Marrewijk, 2003). The ‘synergistic level’ (level 4) has companies look for well-balanced, functional solutions that create value in the economic, social and ecological realms of organizational performance (Marrewijk, 2003). Together with all relevant stakeholders a synergistic win-win approach is taken, which is driven by the motivation that sustainability is recognized as ‘’being the inevitable direction progress takes’’ (Marrewijk, 2003, p. 103). The objective to this approach is to create social awareness.

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2.3 Management Control Systems

In order to achieve strategic goals, like meeting CSR objectives, companies need to control their activities. Various control instruments are available to managers for this purpose and thus serve to provide them with essential information for decision-making and a tool to prevent opportunistic behavior (Flamholtz, Das & Tsui, 1985; Merchant & Van der Stede, 2007). Respective controls are defined as ‘’attempts by the organization to increase the probability that individuals and groups will behave in ways that lead to the attainment of organizational goals’’ (Flamholtz et al., 1985, p. 36). Such controls generate financially quantifiable information as well as external information related to markets, competitors, and customers; but also non-financial information concerning forecasts, operational information (e.g. production processes), and informal personal and social indicators (Chenhall, 2003). Having access to this kind of information, enables managers to make efficient and strategically appropriate decisions with regards to risks, opportunities and other concerns that confront the organization (Gond et al., 2012; Arjaliès & Mundy, 2013). In order to succeed at that, a combination of several controls have to be assembled specific to the organization’s needs that assist managers in the most beneficial way, preferably (Chenhall, 2003). This accumulation of controls can be considered an MCS, which Flamholtz et al. (1985) define as ‘’techniques and processes to achieve goal congruence which may be designed for all levels of behavioral influence: individuals, small groups, formal subunits and the organization as a whole’’ (p. 36). This definition specifically accentuates employee behavior. The impact of MCS on behavior is important for this paper as it is the aim to identify the controls that lead employees towards achieving CSR objectives. Merchant and Van der Stede (2007) take Flamholtz et al.’s (1985) definition a bit further and acknowledge the importance of behavior control by separating the strategic control dimension of the MCS from managerial control and define the latter as the one dealing with employee behavior. This gives credibility to researching middle management as a tool for delivering the most viable results.

When looking at employee behavior and how it is affected by the MCS in place, it is necessary to distinguish between formal and informal controls (see chapter 2.4). This allows us todetermine how these, in an individual manner, might influence employees’ activities, or how they might interact with each other to support employees’ achievement of the desired CSR performance.

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10 mechanisms, nor have policies and procedures in place that safeguard against undesirable behavior, are likely to take advantage of informal controls (i.e. clan controls) (Ouchi, 1979). In contrast to formal controls, they consist of shared values, beliefs, and traditions that guide the behavior of employees, as opposed to controlling behavior through explicit, verifiable measures (Ouchi, 1977). These values, beliefs, and traditions are acquired through interaction with the social world specific to the internal organization (Ouchi, 1979). Through observing co-workers’ and superiors’ behavior and through reading the signals put off by them, employees learn and adopt such values, beliefs and traditions (Ouchi, 1979). Behavior control is achieved via the employees’ adoption of the former and subsequently compels them act in compliance with these social rules. If the employees fail to do so, they will be punished through social sanctions from the rest of the organizational society (Ouchi, 1979). After all, it needs to be mentioned that formal and informal controls do co-exist and can serve in a supplemental or complementary manner (Ouchi, 1979; Chennhall, 2003; Norris & O’Dwyer, 2004; Malmi & Brown, 2008).

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2.4 Research Framework

For the research of this paper we will take advantage of the framework provided in figure 2.4.1 as it does not limit the research to narrow definitions of formal and informal controls. Instead it aids in analyzing the organizational control environment by distinguishing between four situations (i.e cell 1-4). Within this framework formal controls are identified as behavior or output measurements and informal controls as clan controls (Ouchi, 1979). According to Ouchi (1979), the applicability of formal or informal controls is dependent upon the ability to measure outputs of an activity and the knowledge management has on the transformation process of the activity. Deriving from the earlier discussion, informal controls are most suitable in ‘cell 4’ situations where both, knowledge and ability, are low (Ouchi,1979).

With regards to CSR objectives, one can consider the employees’ activities in trying to meet (or not) CSR objectives the ‘transformation process’, and the achievement of these objectives the ‘output’. It is of interest for this paper to analyze this transformation process and identify with support of the model (figure 2.4.1) what type of control is applicable, which type is used in practice respectively.

Figure 2.4.1: Dimensions of management control (Ouchi, 1979, p. 843)

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12 informal controls seemed to be of most influence and sometimes formal and informal controls were perceived as not operating in harmony (Norris & O’Dwyer, 2004).

Having observed that formal and informal controls each in an individual manner contribute and that this also depends on the surrounding factors, inspires an interest in analyzing the contribution of informal and formal controls to the achievement of other business arts (besides decision-making), for instance CSR performance.

Furthermore, the study of Norris and O’Dwyer (2004) showed that management benefits from understanding the relationship between formal and informal controls; for instance when wanting to learn about and improve internal decision-making processes. This fuels our intent to research the use of formal and informal controls to help steer businesses into achieving their CSR objectives. In that we will follow Norris and O’Dwyer’s (2004) research design and conduct exploratory research.

It is justifiable to adopt this approach because exploratory research is more suitable than explanatory research in reaching a solution to the research problem. The interest of analyzing the control environment requires in-depth interviewing and a dialogue between interviewer and interviewee that reveals information which cannot simply be uncovered by explanatory research methods. Acknowledging that sustainability is to a large extent a subjective, perceptive idea and that it is still being implemented by companies rather than a mature concept (Gray, 2010), makes an exploratory approach more fitting. Moreover, the literature concerning CSR in relation to MCS is rather immature at this point, which does not provide a sufficient basis to develop hypotheses from the research available. Additional conclusions need to be derived from this research to contribute to the yet lacking theory. Therefore, propositions will be developed that augment the refinement of existing theory.

In order to explore the control environment of the participating companies, sub-questions are developed to support the analysis. The objective herein is to examine the use of informal and formal controls in the process of achieving CSR goals:

1) Which form of control (i.e. informal or formal measures) is dominantly used by companies in order to achieve CSR objectives? Does this appear in form of a substituting or complementing manner?

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13 might be the company’s reasons for existing (i.e. intrinsically driven). Because it is the aim of this thesis to learn about the controls that influence CSR performance, it is of interest to also identify if different levels of ambition are also accompanied by controls of different nature in order to be able to achieve respective CSR goals. For instance, the workforce may not have a strong sense for sustainability, yet the corporate company sees sustainability as the only option. Subsequently, the workforce may need more formal controls that strictly lay down what is expected of them in terms of CSR objectives, and what will happen if they do not meet these expectations. The example illustrates that it is worthwhile examining the link between ambition level and the respective use of controls.

2) Does the use of controls differ in relation to ambition levels (i.e. extrinsic and intrinsic motivation)?

The figure 2.4.2 summarizes the research framework and demonstrates the relationships between the variables. It explores if the different types of controls as illustrated influence CSR performance. A difference is made in between formal and informal controls for general management control purposes, and between the use of formal and informal controls specifically designed for sustainability concerns. If there is a relationship between companies’ ambition levels and the achievement of CSR objectives is tested by making a distinction in between extrinsic and intrinsic motivation.

Figure 2.4.2: Exploratory research model

CSR ambition (extrinsic and intrinsic

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3 Research Methodology and Design

3.1 Sample Selection and Data Collection

The sample has been selected on the criteria of controllability, reliability and validity within the scope of a Master’s dissertation. It was the intention to include respondents in the research that were capable of fulfilling these criteria. Subsequently a sample was created that fit the requirements in order to conduct valid research that would lead to a solution to the research problem.

The sample has been chosen on a geographical basis, focusing on organizations (i.e. business units) that are located in the Netherlands, but may very well operate internationally. The participants of our sample have been chosen from diverse industries in order to gain a greater insight into the control environment of companies that try to achieve CSR goals to different extents. Among the industries are agriculture; construction; manufacturing; transportation, communications, electric, gas and energy generation, and sanitary services; wholesale; retail trade; finance, insurance and real estate; education; and services, including government services, health care, and janitorial services.

The participating companies employ an average of 16,161 staff members. The individual respondents operate as managers on business unit (BU) level, which occupy 954 employees on average. The average years of being employed by the company are 16 years, 6 years in the current position respectively. To execute the research, it was required that respondents were aware of organizational sustainability concerns, oversaw a minimum of 20 staff members and had a profit and loss or budget responsibility (4 respondents proved to have a cost responsibility). The purpose for basing the study on these respondent characteristics is that managers needed to be able to provide reliable information on accounting and control, as well as on sustainability aspects of the business’ operations. Therefore the managers had to possess the above responsibilities. Furthermore, it was essential that the companies employed a minimum of 150 members in order to ensure that the participants can provide feasible information for our research problem, meaning that they were well familiar with control issues. A detailed overview of sample characteristics can be found in appendix C.1.

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15 Furthermore, the questionnaire was developed as a collective research instrument to be used by the whole research group. Individual parts were customized for each student’s data needs dependent on the thesis subject. Hence not all parts of the questionnaire were used for this thesis (used: part I - III, questions 4.1, 4.2, and 5.1). Applicable excerpts from the questionnaire can be found in appendix A.

Having developed, shortened, and improved the questionnaire the next step was to reach out to companies to ask them to participate in the research. It was desired to include a minimum of 32 respondents. However, due to a low response rate we were only able to include a total of 28 respondents to collect data. The reason ascertaining 32 respondents for the research was due to validity concerns. The realized minimum of 28 respondents yet allowed the execution of feasible research that generated useful results. Although a greater response rate would have been more beneficial, yet out of the scope of a thesis project due to time constraints. It is hence justifiable to question if this sample is representative of a greater population.

Questionnaires were not distributed by mail. Instead, all of the 28 respondents have been asked to fill in the questionnaire together with the responsible student present. It was the intention to encourage the participant to carefully consider the answers they give, moreover help them understand the questions and to provide additional clarification. Other than clarification, no further information in regard to our research was given, in order to avoid steering the participant in a certain direction and subsequently bias the research results.

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3.2 Definition and Measurement of Constructs

The questionnaire (part 2.1-2.2, 3.2-3.3) is used to identify how extensively formal or informal control is used by the participating BUs for general as well as sustainability control purposes. To prevent managers from confusion management control has been termed with management information. Questions refer to the extent to which formal as well as informal management information is used. The former asks about systems, performance indicators and criteria, formalized documentation, descriptions and procedures; whilst the latter focuses on the involvement of employees and management to improve processes and products, and how much they are encouraged to do so. With regards to sustainability controls, the same questions are asked again, yet specifically targeting sustainability. Thus, they aim at generating data on the degree to which sustainability is formally integrated in investment decisions or in the planning and rewards systems, furthermore if sustainability rules and procedures are well documented. Informal sustainability information considers if work teams exist and takes into account the extent to which sustainability concerns are discussed, how extensively management and employees are involved and encouraged to improve the sustainability of processes and products, and if they have enough freedom for managing the sustainability issues.

Furthermore, part 4.1 of the questionnaire determines companies’ objectives to engage in CSR and subsequently uncovers their ambition level of doing so. Questions that are asked, aim at identifying the degree to which managers find that certain factors drive their engagement in CSR. Extrinsic motivation is determined by the degree to which BUs primarily are concerned with cost reduction purposes and customer perception, whilst intrinsic motivation is determined by the desire to do the right thing, a desire for sustainability, or because sustainability might be important in itself or even inevitable. In connection with this, section 4.2 is used for interview analyses (see appendix D) and determines the meaning of sustainability by collecting information about BUs’ definition of sustainability. It is identified, among others, whether for instance sustainability means providing welfare to society in accordance to laws and regulations, or whether it can better be described as searching for well-balanced, functional solutions creating economic, social and ecological value in a synergistic win-win approach.

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17 Independent variables: Formal and informal control

The aim of this thesis is to distinguish between formal and informal controls in order to see the difference in contributions they make to the achievement of CSR objectives. For this matter two separate constructs are created whereby formal and informal controls build two independent variables.

In order to test in how far formal controls are used by the BUs, we asked the respondents to rate the formal management information they use on a scale from 1 to 7, 1 indicating to a small extent and 7 to a large extent. Thus, we measured this variable on eight items. However, the alpha was 0.522, which is why we deleted items 2.1b, 2.1d, 2.1f and 2.1h. It is justified to exclude these items because the preceding correlation matrix showed no correlation. Consequently, the new alpha is 0.651 and regards four observations.

Comparably, we measured the use of informal management information by means of four items, all on a scale from 1 (to a small extent) to 7 (to a large extent). The items all correlated and the scale was reliable with an alpha of 0.672. For both variables a mean variable could hence be created.

Formal MCS = mean variable of the use of formal management information Informal MCS = mean variable of the use of informal management information Independent variables: Formal and informal sustainability control

Likewise the general controls, sustainability controls are tested using two independent variables in order to learn about the different contributions formal and informal controls make to the achievement of CSR objectives.

In order to test to what extent BUs use sustainability controls, we asked the respondents to indicate their use of formal and informal sustainability management information. The use of formal information was measured by means of eight items, also on a scale from 1 (to a small extent) to 7 (to a large extent). 3.2d and 3.2h did not correlate and were hence excluded from the items. Afterwards the scale was reliable with an alpha of 0.806.

Similarly, the use of informal sustainability management information was measured on a scale from 1 (to a small extent) to 7 (to a large extent), by means of eight items. They all correlated, which also lets us conclude that the scale was reliable with an alpha of 0.931. Mean variables have been created accordingly. Formal SMCS = mean variable of the use of formal sustainability management information

Informal SMCS = mean variable of the use of informal sustainability management information Independent variable: CSR ambition

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18 given statements. For that we measured the degree to which BUs are concerned with and driven by specific sustainability objectives, by means of six items, all on a scale from 1 (strongly disagree) to 7 (strongly agree). The scale was not reliable with an alpha of 0.587. The correlation matrix showed that all items correlated, which means that we could not delete any items to increase the alpha. Hence a mean variable for the entire construct could not be created. Nevertheless, we could make a distinction between extrinsic motivations (4.1a-b) to engage in CSR and intrinsic ones (4.1c-f). There was no correlation between items 4.1a and 4.1b, hence no mean variable was created. Subsequently 4.1a and 4.1b must be considered separately. However, items 4.1c-f did correlate and provided an alpha of 0.831. Thus, the scale tested reliable and a mean variable for intrinsic motivation could be created.

Extrinsic motivation to engage in CSR driven by cost reductions = 4.1a Extrinsic motivation to engage in CSR driven by customer perception = 4.1b Intrinsic Motivation = mean variable of 4.1c-f

Dependent variable: CSR performance (achievement of CSR objectives)

In order to test to what extent BUs have achieved their CSR objectives we asked the respondents to indicate their perceived business unit performance with respect to sustainability. The degree to which companies find their sustainability performance satisfactory was measured by means of eight items, on a scale from 1 (very poor) to 7 (very good). It is justified to exclude 5.1d. because it did not correlate with the other items. Consequently, the scale was reliable with an alpha of 0.896 and a mean variable has been created.

CSR Performance = mean variable of perceived sustainability performance variables

3.3 Data Analysis

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19 Multiple regression analysis. In order to test the relationship between the individual types of controls and CSR performance a multiple regression analysis was performed. This technique can be used to examine the relationship between a number of continuous independent variables and one continuous dependent variable (Pallant, 2011). It allows a sophisticated analysis of the relationships between the set of variables. This makes it suitable for more complex problems, being considered a technique for more practice relevant research (Pallant, 2011). Multiple regression explores the given model as a whole and reveals the individual correlations and contributions of the independent variables included in the model. Each independent variable is evaluated on its predictive power, in comparison to the other independent variables, in terms of how much of the variance in the dependent variable can be explained by the independent variables (Pallant, 2011). The analysis provides the statistical significance of the results for both, the contributions of the independent variables, as well as for the whole model (Pallant, 2011). Even though multiple regression analysis is advised not to be used for small samples, we use this technique and acknowledge the fact that generalizability of our sample to others is questionable. Subsequently, conclusions drawn from the tests are taken with caution.

According to Pallant (2011), when conducting the regression analysis, one needs ensure that the assumptions underlying a multiple regression analysis are met. With regards to the data of this study, outliers could not be detected as all standardized residual values fall within the suggested range of -3.3 and 3.3 (Pallant, 2011). A straight-line relationship between the independent variables and the dependent exists, as well. Appendix C.3 provides details on residual statistic values.

Furthermore Pallant (2011) advises to pay attention to the risk of multi-collinearity. It is caused by a high correlation between independent variables (r > .7). Multi-collinearity does not contribute to a good regression model, which increases the chance of biased conclusions. In case multi-collinearity assumptions are violated, one needs to consider omitting the highly correlated independent variables. Because there was a risk of multi-collinearity, adjustments to the exploratory model (figure 2.4.2) needed to be made. The intrinsic motivation variable highly correlated with CSR performance (r > .7) and consequently needed to be removed from the model. In contrast to that, extrinsic motivation variables (cost reductions and customer perception) were kept for testing.

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4 Results

This chapter is semi-structured. First, the statistical results will be presented. Second, findings of the interviews will be used to explain and interpret respective statistical results. For further reading, a case by case analysis of the interview results is included in appendix D.

4.1 Descriptive Frequencies

The descriptive frequencies of the constructs included in the regression analyses serve to provide a picture of the sample characteristics that are important for this study. For each construct, the descriptive statistics are presented in table 4.1.1. The values given are based on a 7-point Likert scale, 1 being the lowest (i.e. to a small extend/strongly disagree/very poor) and 7 the highest (i.e. to a large extend/strongly agree/very good).

Formal

MCS

Informal

MCS

Formal

SMCS

Informal

SMCS

Intrinsic

moti-vation

Cost

reduc-tions

Customer

percep-tion

CSR

perfor-mance

N 28 27 27 27 28 28 28 23 Mean 5.12 5.36 4.00 4.29 4.46 4.14 4.82 4.67 Median 5.25 5.50 3.83 4.38 4.50 4.50 5.00 5.14 Mode 3.50 6.50 3.50 3.75 2.75 5.00 6.00 5.71 Std. Deviation 1.10 1.11 1.28 1.50 1.37 2.07 1.42 1.23 Minimum 3.50 2.50 2.00 1.63 1.00 1.00 1.00 1.43 Maximum 7.00 7.00 6.67 7.00 6.75 7.00 7.00 6.14 Table 4.1.1: Descriptive frequencies

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21 As the findings of the interviews will reveal throughout this chapter, not all BUs have implemented CSR to the same degree; some are still at the beginning stages of integrating a CSR strategy and others are less concerned with CSR as a whole. This could explain the greater use of general controls compared to the extent to which sustainability controls are used.

4.2 Multiple Regression Analysis

The multiple regression analysis was performed with the intention to uncover how well the different types of controls (formal MCS, informal MCS, formal SMCS, informal SMCS) and extrinsic motivation (cost reductions, customer perception) predict the achievement of CSR objectives (CSR performance). The test also revealed how much variance in the achievement of CSR objectives can be explained by the individual types of controls.

The results of the regression, adjusted R-squared = .533, p < 0.01, show that this model reaches statistical significance. This means that the model has explanatory power over CSR performance. Thus, there proves to be an association between the types of controls and the achievement of CSR objectives.

A positive correlation can be observed between all independent variables and CSR performance, except for the negative correlation between the extrinsic motivation ‘cost reductions’ and CSR performance, which are weakly correlated (r = -.107). The strongest correlation with CSR performance can be observed with informal SMCS (r = .683), customer perception (r = .494), and formal SMCS (r = .49). A small correlation exists between formal MCS and CSR performance (r = .162), whilst the correlation between informal MCS and CSR performance is very weak (r = .056).

Subsequently, looking at the contribution each independent variable makes to the prediction of the achievement of CSR objectives, the results show that the informal SMCS makes the strongest unique contribution to explaining the dependent (Beta = .602, p < .05). Informal SMCS is also the only independent variable that tests to make a significant contribution to CSR performance. The next biggest unique contribution is made by customer perception (Beta = .341), yet not significantly (p = .057). Informal MCS (Beta = -.287), formal SMCS (Beta = .227), formal MCS (Beta = -.055), and cost reductions (Beta = -.006) make less of a unique contribution, which also do not test to be significant. Thus, the latter that do not test significant are only representative for the sample of this study.

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22 Table 4.2.1: SPSS output – Relationship between use of controls, extrinsic motivation and achievement of CSR objectives

To conclude the above observations, the results indicate that the uses of the different types of controls can be associated with the achievement of CSR objectives. More precisely the results reveal that the best predictor is informal sustainability control, implying that a higher use of informal sustainability controls is associated with a more satisfying CSR performance. Furthermore, one can conclude for this sample specifically that as the use of formal and informal general controls increases, but more so as the use of sustainability controls increases, the achievement of CSR objectives rises as well. Likewise, a growing motivation driven by customer perception concerns is related to a growing achievement of CSR objectives. In contrast to that, a growing motivation to only engage in CSR if it reduces costs is associated with a decreasing achievement of CSR objectives. Lastly, informal general and sustainable controls define more of CSR performance compared to formal controls.

The above results can be explained by what is found in the interviews. For instance, the most noticeable statistical finding is the strong positive contribution of informal sustainability controls to CSR performance. Likewise, the interviews show that the BUs that make great use of informal controls also perceive their CSR performance to be satisfactory at a minimum. It becomes also apparent that a great involvement in CSR is accompanied by a presence of an intrinsically motivated workforce, which does not need to be controlled into achieving CSR objectives using formal measures. Instead, informal controls are dominantly in place.

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23 Evidently, the characteristics of the workforce, including the management and the BU culture, enable employees to accomplish BU goals. It is these companies (as described above) that also report having a good perceived CSR performance.

‘’…especially because the goals that we have for CSR are not only passed down from the top, but concern also things that individuals at the BU find important. We motivate employees to take initiative to provide their input and help us become more sustainable. Our employees like the idea of being able to participate.’’

From the statistics one can identify the strongest correlations of CSR performance to be with sustainability controls, whilst weaker correlations are found for general controls. Additionally, great contributions of sustainability controls to the explanation of CSR performance can be observed. Considering these findings in the context of CSR, it is very much comprehensible that sustainability controls contribute to the achievement of CSR goals to a greater degree than general controls that are not specifically designed for the achievement of CSR. The interviews show that companies that are using general controls in connection with CSR are the ones that are still busy implementing their CSR strategy or are not very concerned with sustainability issues. Respondents explain that general controls are used more intensively for the reason that sustainability controls could not be sufficiently developed yet, due to the premature CSR implementation. Accordingly, the CSR performance ranks lower, as these BUs are either not very interested in CSR or did not have sufficient time to achieve anticipated results.

Moreover, the regression shows that quite a bit of the variance in CSR performance is explained by the external motivation driven by customer perception. Throughout the interviews it becomes apparent that the majority of BUs acknowledges the importance of the customer. They emphasize that the reason for engaging in CSR is not solely based on financial considerations or on how their operations might affect the social and ecological environment, but foremost based on why it would be important to the customer to see the company engage in CSR. The fear of reputation damage has not been explicitly addressed, but the concern for customer demands regarding CSR has.

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24 ‘’ We have an enormous amount of formal rules to obey in order to keep our operating license and that regards sustainability to a great extent. The great involvement of the government plays a crucial rule in this as well, which again leads to more formalization. And of course we are a German company, which means that everything is very bureaucratic and formalized.’’

A cross-analysis between interviews uncovers these factors that seem to influence BUs’ control environment. It shows that they include the industry, type of products, customer base and their perception of the BU’s sustainability operations, characteristics of workforce, its motivation and culture, the impact of BU operations on sustainability, as well as corporate and governmental authority. Respondents agree that these factors, although in different ways depending on the case, affect the BUs’ control environment and subsequently influence in how far BUs can achieve their CSR goals.

After all, the scale and scope of CSR goals, as well as the ability to achieve anticipated results and measure their outcomes, determines the achievement of CSR objectives. The interviews reveal that the longer the time-frame of possibly accomplishing CSR goals, the less predictable the actual achievement of such goals becomes. In addition to this, the scope of CSR projects appears to grow into an obstacle for the achievement of CSR objectives, the larger the CSR project becomes. Furthermore, all respondents are clear on the matter that the CSR performance is influenced by the degree to which the BUs know how to achieve their goals and their ability to measure that they have achieved what they initially proposed. The interviews show consensus in that it is easier to know how to achieve CSR goals if these goals can be quantified (e.g. CO2 emissions). This also increases controllability and measurability. However, once more than one party is involved, more precisely once people are involved, the ability to measure the output decreases and the issue of knowing how to control and achieve the goals becomes very complex, resulting in vague expectations about CSR performance.

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25 In connection with this, the problem of identifying what sustainability means to all involved parties remains one of the major problems in trying to control for more sustainability and also in trying to establish CSR goals in the first place, which again affects CSR performance.

‘’What defines success? This question is not easy to answer. Success means something completely different in the eyes of each individual, and how do you then find common ground as a company? The same applies to the question ‘What is sustainable?’, for instance, sometimes a product can be sustainable, but the logistics are not.’’

Similarly another respondent explains:

‘’Some [goals] are quite easy and some of them not so much. Anything that is quantifiable, like production or renovation works, is one of the easy goals and we can figure out how to realize them because you know how to get there…They are factual and quantifiable, which can tell you what happens or what needs to happen. What gets measured gets done and that is our starting point with our move towards sustainability…In other cases it is a bit more difficult and it takes time. Always when people are involved it gets complicated.’’

4.3 Correlation Analysis

Encouraged by the literature and interview findings, it is worthwhile examining the correlations of intrinsic and extrinsic motivation with the use of sustainability controls; whereby intrinsic motivation represents a higher degree of CSR involvement (ambition levels 3-5) and extrinsic motivation a lower degree (ambition levels 1-2).

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26 Table 4.3.1: Bivariate correlations between intrinsic motivation and controls

One can conclude that the use of sustainability controls increases as the intrinsic motivation to engage in CSR grows. Moreover, it stands out that, although not significant, an increasing interest to engage in CSR driven by cost reductions is associated with a decreasing use of sustainability controls. Whereas this only holds for customer perception concerns regarding formal sustainability controls, there seems to be an increasing use of informal sustainability controls associated with customer perception.

Comparing these statistical results to the interviews, one finds that the more intrinsically driven, the more BUs implement sustainability controls in general (i.e. formal and informal). In other words, the use of sustainability controls of these BUs is much higher compared to the BUs that do not make CSR as much of a part of their operations. Hence, a higher level of CSR engagement is accompanied by a greater use of sustainability controls.

Likewise, one finds that the majority of BUs that are intrinsically driven to engage in CSR, and whose CSR strategy has had time to mature throughout which their CSR goals could be fully implemented, make greater use of informal sustainability controls. Where such BUs are extrinsically driven, formal sustainability controls are used to greater extents; even though the analysis shows no significant correlation.

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27 ‘’Employees need to believe in what they do. This means that they also have to believe in sustainability and what they would like to achieve with regards to it. Therefore informal controls are much more important in order to stimulate employees to achieve their goals…The board is also much more in favor of informal control because they find it important that the right values motivate employees to do what is expected of them rather than strict rules.’’

Moreover, concerning BUs that are just starting to implement a CSR strategy, one also notices a tendency towards having more informal controls in place. Many respondents report that one starts out with informal controls. Once CSR goals are in place, one needs to formalize the informal controls in order to be able to achieve these goals by making them explicit, simultaneously communicating to people what is expected and how it can be achieved. Hence a formalization process of controls is observed to take place throughout the phases of integrating a CSR strategy. Here it is important to note that this observation only holds for BUs whose decision to engage in CSR is voluntary and not forced onto them by third party authorities, such as the government. Taking a more or less forced implementation of CSR into consideration, it stands out that these BUs report to most often make use of formal sustainability controls as opposed to informal ones. In this regards, CSR implementation is based on formal controls passed down by authorial stakeholders, while anticipating informal controls to develop throughout or post the implementation process.

Furthermore, the industry and company culture play an important role with regards to which types of controls are used to larger extents. For instance, one organization operating in healthcare explains that the workforce does not see CSR as its main priority, which results in an allocation of financial resources, but also human capital, elsewhere. Consequently their motivation to engage in CSR is extrinsically driven, pressured by the CSR department. Formal controls are required in order to make the workforce comply.

‘‘We need rules to push people into going after our sustainability goals and to guide us and actually make us comply with our sustainability strategy. ‘’

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28 Taking these interview findings into consideration, one comes to the same conclusion drawn earlier, namely that there are many factors influencing the types of controls being used in order to ensure that CSR objectives are met. To these findings we add the state of maturity of the CSR implementation, subsequently also influencing CSR performance. After all, the motivation to engage in CSR and BU culture plays a crucial role in that it seems to have a great impact on whether more formal controls are necessary or whether informal controls are capable of achieving objectives, where the latter regards the BUs being extensively driven by intrinsic sustainability needs.

Lastly, one must not neglect to mention a few additional interview findings that stand out. The findings reported here are thus solely based on interview observations.

In relation to the achievement of CSR objectives, formal controls are mainly considered as guiding and the informal controls as enabling. All respondents, but two, report informal and formal controls to complement one another. The exceptions are created based on the BUs’ novel introduction of CSR into their operations. For the one BU that is intrinsically driven to engage in CSR formal sustainability controls are non-existent at this point and hence informal sustainability controls still substitute the former. For the other BU informal controls are non-existent, but the need to engage in CSR is pressured from the parent company and thus not intrinsically driven. These observations confirm our conclusions derived from earlier analyses.

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29

5 Discussion and Conclusions

This chapter develops propositions by reflecting on the results and their interpretations. Additionally, conclusions are presented, including a discussion of managerial and theoretical implications, as well as the limitations of this study and avenues for further research.

5.1 Discussion

In their paper ‘’The use of management control systems to manage CSR strategy: A levers of control perspective’’ Arjaliés and Mundy (2013) suggested to research the relation between the use of formal and informal controls in achieving CSR strategy. They considered this to be of importance because their study provided evidence that an MCS has the potential to contribute to a successful execution of CSR strategy. Arjalies and Mundy (2013) were of the opinion that distinguishing between formal and informal controls in further research would therefore bear fruitful implications for management, in particular because they excluded informal processes from their analysis.

This recommendation caught our interest and it was hence the intention of this study to reveal which forms of controls are used to help BUs achieve their CSR goals, and by that distinguish between formal and informal, general and sustainability controls. In connection with this, we wanted to identify which control types make the most unique contribution to the achievement of such goals, and further determine if BUs with different ambition levels (i.e. extrinsic or intrinsic motivation) use different controls for the achievement of CSR goals.

It was found that general as well as sustainability controls, formal and informal, explain the achievement of CSR objectives. Yet, only informal sustainability controls seem to make a significant difference in CSR performance. This is supported by the findings of Norris and O’Dwyer (2004), who similarly reported to have found informal controls of most influence to the achievement of socially responsive decision-making. One hence expects that if companies make greater use of informal sustainability controls, the ability to achieve CSR objectives improves.

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30 In particular for this sample one can conclude that sustainability controls aid the achievement of CSR objectives to a greater extent than general controls. Furthermore, BUs’ concern with customers’ perception of their sustainability involvement makes a noticeably positive contribution to their CSR performance, as opposed to BUs’ concern with CSR reducing costs.

Proposition 2: Using sustainability controls results in greater achievement of CSR objectives than using general controls.

Proposition 3: Being driven by customer perception concerns supports the achievement of CSR objectives.

The relationship between intrinsic motivation and the use of different forms of controls could be explored with aid of the correlation analysis. It was found that a great intrinsic motivation is accompanied by a great use of sustainability controls. Since sustainability controls are found to contribute to CSR performance we propose:

Proposition 4: Intrinsic motivation increases the use of sustainability controls and the achievement of CSR objectives.

Comparable to this study, Norris and O’Dwyer (2004) also analyzed the difference between formal and informal controls. They focused their analysis on the controls’ individual contributions to socially responsive decision-making and concluded that this contribution differs according to changing circumstances. They also found that formal and informal controls do not always operate in harmony. We made similar observations when comparing the controls’ contribution to the achievement of CSR objectives. Comparing the interview findings to our statistical analysis we found that when BUs operate in an environment that is bound to laws and regulations or experience great authorial pressure from, for instance, corporate level or the government, the controls that are used to ensure the achievement of CSR objectives are dominantly of formal nature. In comparison to that, for BUs that experience less of this pressure and enjoy operational freedom with regards to their CSR decisions, more informal controls are present.

Proposition 5a: Being increasingly bound to laws and regulations results in more formal controls being used to achieve CSR objectives.

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31 In connection with this finding, the results chapter indicates that the fact of being forced to or voluntarily engaged in CSR has an impact on the type of controls being used. In other words, the type of motivation, being extrinsically or intrinsically motivated, influences the choice of controls to achieve CSR objectives.

Proposition 6: Voluntarily engaging in CSR, intrinsically driven, results in more informal sustainability controls being used; whilst a forced engagement, extrinsically driven, results in more formal sustainability controls being used.

Furthermore, it was found that the degree to which BUs let their CSR implementation mature and thus had time to fully establish their CSR goals relates to the use of general or sustainability controls. It appeared that general controls were used more dominantly by companies that were not very much concerned with CSR or had just begun to implement CSR; whilst dominantly sustainability controls were used by BUs whose CSR strategy had time to mature.

Proposition 7: General controls, in place of sustainability controls, are more suitable to achieve CSR objectives for companies that are not very much concerned with CSR or not maturely engaged in CSR, yet.

As part of analyzing the BUs’ control environments attention was paid to how much the BUs know about how to achieve their CSR goals. A focus also remained on their ability to measure their CSR achievements in relation to initial intentions. Using Ouchi’s (1979) framework (figure 2.4.1), it was identified that BUs find themselves in a cell 2 or 3 when CSR goals are quantifiable and achievable in the foreseeable future. Consequently, formal controls are considered to be of aid, according to Ouchi (1979). However, most BUs find themselves in a cell 4 situation, in which the knowledge about the transformation process (i.e. how to achieve CSR goals) is weak and so is the ability to measure the outputs (i.e. if CSR goals actually have been achieved). The controls that are likely to deliver greatest and most successful behavior control, according to Ouchi (1979), are of informal nature. With regards to the respondents, it was found that the ones that recognize the need for informal controls (i.e. the ones that intensively use informal sustainability controls and are intrinsically motivated) are also the ones reporting better CSR performance. At this point one should be reminded that our key finding is that informal sustainability controls are significantly contributing to CSR performance, furthermore explain the achievement of CSR objectives more than all other control types included in the research model. Therefore we propose:

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32 This proposition is especially due to further examination and open for discussion. It already became apparent throughout the paper that different circumstances confront the BUs with different control problems. In some cases, more formal sustainability controls are required to make the workforce comply. Where BU culture does not respond to informal controls in desired ways, more formal controls are reported to be applicable to achieve CSR goals. Hence it needs to be researched under which circumstances this proposition holds or if it holds at all.

5.2 Conclusions

It was the overarching aim and anticipated contribution of this thesis to provide propositions for the refinement of theory that describes contemporary controls which influence the achievement of CSR objectives. To answer the research question ‘’What is the relation between the use of formal and informal controls in achieving CSR objectives?’’, it can be concluded that controls specifically designed for CSR matters are of better aid to BUs than general controls. By conducting this research we learned that formal and informal sustainability controls serve each other in a complementary manner. Once CSR has been fully implemented they facilitate and strengthen one another. For this complementary relationship to occur, a formalization process is essential that explicitly lays down CSR goals and controls, within which informal controls can develop. Subsequently, one can further conclude that formal controls guide BUs in their pursuit of achieving CSR objectives and serve as boundaries in which informal controls operate. However, the key finding of this study is that informal sustainability controls seem to highly contribute to the achievement of CSR objectives. Furthermore, there seems to be a relation between the level of ambition to engage in CSR and the controls in use, as it has been observed that a greater intrinsic motivation is associated with a greater use of sustainability controls, specifically of informal nature. A higher level of ambition to engage in CSR (i.e. levels 3-5) is thus assumed to positively contribute to CSR performance. This is the most comprehensible as intrinsically motivated individuals do not need formal controls to be compelled into producing CSR results. In contrast to that, we also learned that customer perception, which is originally classified as extrinsic motivation, is as well a driving force in the contribution towards the achievement of CSR objectives. The value BUs place on satisfying their customers is thus assumed to stimulate the production of CSR results.

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33 deciding factor as to whether more or less formal sustainability controls were implemented. Moreover, the findings allow us to conclude that the larger the scale and scope of the BUs’ CSR goals, the more difficult it seems to achieve these goals. Subsequently, one can derive that the less is known about how to achieve CSR goals and how to measure if they have been achieved, the more indefinite the CSR performance.

Managerial and theoretical implications. Using the propositions derived from this research moves the literature one small step closer towards reaching solutions that deal with the management control design and use problem within the context of CSR performance. Measuring and controlling for sustainability is still a little explored field. Whilst it was not the intention of this thesis to find measurement tools for sustainability, it was the intention to provide information on the control issue. Management gained an idea about how formal and informal controls are used by contemporary BUs for moving companies towards a sustainable performance. Specifically an understanding of the contributions sustainability controls make to the achievement of CSR objectives could be developed. Above that, it was illustrated what types of controls appear to be most suitable under the influence of different factors. Where academics can take up where we left off and further explore the propositions we introduced, management can take the knowledge we provided and analyze their own control environment in comparison to what we proposed. Companies could benefit from determining if their control environment drives their organizational responsiveness in achieving CSR objectives. For instance, they could explore if sufficient informal controls have been developed to support this responsiveness. Such research projects might reveal avenues for further improvements concerning the control environment that facilitates CSR. All in all, the study confirmed that MCS are situation dependent. Although the MCS has been split up in formal and informal, general and sustainability controls, the difficulty to find one overarching solution to many BUs’ control problems remains; although it appears to be manageable to find solutions on and individual basis.

What we have learned from this study is that sustainability is very much an issue of perception. It is dependent on the involvement of many factors and sometimes meeting one sustainability goal, means sacrificing another. Depending on the situation and the goal, sustainability cannot always be achieved in all aspects, regardless of the controls in place.

The Contemporary Control Environment for the Achievement of CSR Objectives: An Analysis of Formal and Informal Controls